Dollar slumps to 14-month low
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The Bloomberg Dollar Spot Index hit a 14-month low on Friday as investors assessed an investigation into US President Donald Trump that may stall his economic agenda. The index slid 0.3% to its lowest level since May 2016.
Politics remained at the forefront in the US, with reports that special counsel Robert Mueller is expanding his investigation to include Trump’s business dealings and the President telling The New York Times that any digging into his finances would cross a red line.
White House press secretary Sean Spicer resigned Friday as Trump named financier Anthony Scaramucci communications director.
The euro gathered momentum following Thursday’s comments by European Central Bank (ECB) president Mario Draghi that policymakers in the fall will discuss unwinding quantitative easing.
Rising hawkishness from the ECB has helped the euro rally from lows last seen near the start of the millennium, with investors expecting tapering to start in the new year and pricing in a 10-basis-point rate hike by September 2018. Bloomberg
Oil slides as Opec production is seen rising
Oil dropped the most in two weeks as a report that the Organization of Petroleum Exporting Countries’ (Opec’s) July supply will be the highest this year fuelled worries over a global glut.
Futures tumbled 2.5% in New York on Friday, erasing gains from earlier this week. West Texas Intermediate for September delivery declined $1.15 to settle at $45.77 a barrel on the New York Mercantile Exchange, the lowest level in more than a week.
Supply from Opec is set to exceed 33 million barrels a day this month as members, including Saudi Arabia and Nigeria, increase shipments, according to tanker-tracker Petro-Logistics SA. This calls into question the effectiveness of the Opec’s deal to reduce output and help rebalance the market.
Several Opec nations plus some non-members will meet in St. Petersburg to discuss the progress of the agreement to trim output. Bloomberg
European shares sink as rising euro weighs
European shares fell on Friday as company earnings disappointed at the end of a turbulent week.
The euro climbed to a two-year high on Friday, sending the exporter-heavy STOXX 600 down 1% to a weekly decline of 1.7%. Euro zone stocks fell 1.3%, while blue chips sank 1.4%.
The weekly loss came after the STOXX 600 had its strongest week in more than two months, indicating a sharp turnaround in sentiment.
“FX strength is set to weigh on euro earners’ results, which will likely contribute to subdued beat ratios for the remainder of the season,” Deutsche Bank’s equity strategist Wolf von Rotberg said.
However, money kept flowing into European equities, with the largest inflows to the region in 10 weeks, some $3 billion. Investors pointed to inflows as mitigating muted second-quarter earnings growth.Reuters